The Game with Alex Hormozi - Fear of Losing, Finding High-Level Employees, and Simplifying Offers (with Tanner Chidester) Pt.1 - Aug '21 | Ep 439

Episode Date: September 24, 2022

The only games worth playing are games that you can continue to play. Today, join Alex (@AlexHormozi) as he guests on Tanner Chidester’s YouTube to talk about how the role of having general business acumen can contribute to general business success, how pain can be used to feel success, and how to simplify your offers in such a way that they're both compelling, easy, valuable, and get people to buy them. This is part 1 of the interview.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Check out the episode on Tanner Chidester’s YouTube Channel! Timestamps:(1:40) - Book inspiration from years of knowledge, hiring high-level talent.(4:32) - Asking experts right questions, millionaire efficiency with 2-day workweek.(8:22) - Strong business background's impact on success, scariest entrepreneurial moment.(10:56) - Trend of successful people avoiding failure, Alex's perspective evolution.(14:01) - Simplicity challenge; litmus test to gauge offer complexity.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Mosy Nation, we got a two-parter for you today. This is part one of a podcast that I was invited on with Tanner Chedester, where we talked about, one, how the role of having general business acumen can contribute to general business success, two, how pain can be used to fuel success. And third, how to simplify your offers in such a way that they're both compelling, easy, valuable, and get people to buy them. I think humans experience pain. And then it just takes certain types of people, take the pain and let it beat the strength into them, and other people take the pain and let it beat the strength out of them. And they blame the person who caused that pain as the reason they are not successful

rather than saying, I will not give this person power anymore over my life. And so as a result of the pain that they beat into me, I will become stronger. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. All right. So guys, I'm coming with you with the man, the myth of the mustache, Alex Hermose. I mean, Alex actually started talking a lot recently. I had some good conversations with them. It's actually been great to get a perspective, like different perspective.

I think one of Alex's strengths in my own opinion is he just, well, you think a lot deeper than I thought maybe you would. And maybe it's because we're both like in the gym space. So people are like, oh, they probably don't think that deep or whatever. But I actually learned a lot of like valuable insight from you. But guys, what we want to talk about today is his book, $100 million. offers and yeah right there he's got the hard copy you got hard caught you got them all right you got I've got every version of how many years of knowledge would you say is packed into this

thousands I mean it's just it's just our knowledge scaling our business our businesses rather you know from the last decade and how many how many mistakes do you think you made along the way a lot I can directly attribute probably like $7 million in profit of mistakes that I did not. I did not make just from just from just like one chapter in that book. Do you think that most of the mistakes you made, do you think it's from your own experience? Do you think it's from like hiring other people and then doing what they say, but it doesn't work out the way you thought it would?

Or maybe it's a minute. It's a good question. I would say sure it's other people stuff, but like I've also listened to other people. So it's not like I can write other people off. It's just, you know, especially when you're starting out, you have mentors and coaches and things like that. And part of it is taking other people's experience, you know, at face value and going for it. And a lot of the things earlier on did work out for me. I think as we as as we got much bigger, you know, a lot.

And I know that you found out later, you know, how much we were doing for a much longer, you know, period of time than most people knew. The people who were giving advice hadn't even made the amount of money that we had made. And so it was just very difficult for me to find people who I could, whose perspective I could trust. And that was a very difficult thing for probably like a two or three year period, which is why we started acquisition.com and whatnot to hopefully provide that for people who were going from 10 million to 30 million to 50 million, et cetera. Yeah, did, I mean, was it hard to find those people? I'm genuinely curious.

Like I've had that same feeling and I'm not at your level. So that's how I felt was when I was looking for people, is trying to find those individuals who are truly at that level. Was it hard for you to find them? Yes. But I think you can get there as much as like there's periods of time where have to grind and put your shutters on. I think there's like, I think you, you execute until like all of the things that you

have wanted to execute or executed. And then I think you have to look back up again and look around and say like, okay, I need more information and new frames and new lenses to see what I can't see right now. Because like I always think like, if I were to talk to Elon Musk, like I wouldn't want to ask him questions. I would just say like, what do you see that I don't see from my perspective given my resources, skills and character traits that that you would recommend I should do given what you see? because I wouldn't want to ask, my questions are stupid.

You know what I mean? I mean, candidly, it's like there was an acquaintance of mine who ended up sitting down with a guy who was a billionaire at the time and he was really fresh in his career and he was in the fitness space. And he ended up spending like the whole lunch asking about where to source equipment from. And he always looks back at how stupid it was that these are the questions that he was asking this man. But it's because he just didn't know any better.

Right. And I think that that's what I try to avoid when I'm talking about. people who have, you know, experienced a different level. I try and I try and get them to ask the questions that I should be asking. Yeah, so that's a great point. I'm on the same mind frame where when I'm trying to ask someone ahead of me, it's like, is this a good question? Because you sit there and I sit there in a debate.

I'm like, this sounds like a good question. Like, no, that's a dumb question. That's like stupid. How do you get better at that? Do you feel like it's a skill you've learned over time? 100%. I think asking good questions is probably the single greatest skill that an entrepreneur can have. because asking a good question shows depth of thought.

Like you can, in my opinion, you can tell how intelligent and at what level someone's at based on their questions, far more than the answers. And if you ask bad questions, you get bad answers. And if you ask stupid questions, you get stupid answers. And so I think a lot of times, like even when we're looking at our business, right, and there's a circumstance or a situation or a problem that arises, a lot of times it's like, they'll ask a question. Like, even my team will ask a question. I'm like, do you think that's the right question to be asking right now? Yeah. Because usually it's not important at all. It's a totally different question we should be asking. Like, I'll give you, I'll give you a fun example. So I had a very close friend of mine. She does about 50 million a year. And she takes about 20 home. And she came to me and she was like, Alex, I need your brain. And I said, okay, what's up? And she said, I need you to show me how I can make $5 million an extra profit without doing anything extra. And in 60 minutes, we did it. And then she made an extra $5 million. She made an extra $4.5 million.

from one change in pricing. But like the thing is, it was so evident because she was like, she wasn't like, how can I grow a top line? It's like, well, duh, there's a million ways to grow top line, right? But she was like, how can I? And she adds constraints to her questions.

And so a lot of times now, the questions I have have constraints and the goals that I have have constraints. How can I get to $100 million working two days a week? Can you 100 million? I know what I need to do. But how do I do it do in two days a week? You think different.

Yeah. No, I love that. I mean, that makes total sense. Is there behind that, you just said two days a week. Like, is it more of the child? for you or is there a reason you would do it like in two days a week is just an example, but is there a reason behind that? Is it just more to have the challenge?

So like many things, I think there's multiple reasons behind it. So one is, I think it would be a fun challenge. The second is I know how to get things. I know how to accomplish things through sacrifice. But I know that when I accomplish things to sacrifice, I end up resenting the thing. And I don't want to resent the thing. So to then shift the perspective outwards, the only games worth playing are games that you can continue to play.

So it's like if I'm helping Susie lose weight and I help her lose weight for six months and then she drops off and then gains all the weight back, who cares? And so I'd rather have Susie just walk every day if she can absolutely keep walking. And if she does that for the rest of her life, I've genuinely added 10, 20 years to her life and probably made her truly fit in a way that's reasonable and acceptable over the longer period of time, which is the only thing that matters. And so for the business component, it's like I know that the person who can stay at it, the longest most of the time will win because it's just I have there's too much time under the bar

it would be unreasonable for me not to win because I just have too much more experience than everyone else. And so if that's the objective is like how can I play this game the longest, then then the question is how can I do that? And so for me, it's like, all right, well, if I spend two days a week and truly working, I'm going to put quotes here because the other days I'm obviously doing stuff. I'm writing the book and recording videos and things like that. But those are things that are like, I love to do those things. I genuinely enjoy it. And if I don't feel like doing it,

I want to do it. Was that? I was saying, not like actually inside the business, just other tasks. Yeah, exactly. And those are,

those are fun creative flow tasks for me. Like, those are fun. And so that was the idea is like, if I can create the structure under which, or circumstances under which I could continue to do this for, for perpetuity, then I will win because I won't quit or switch gears.

Because that's usually, I mean, entrepreneurs don't really quit. They just change shit because they just, can't say that. Right. I was going to ask you, do you think part of your fitness background is why you're so successful? Do you see that trend among people who have a strong fitness background and maybe business success? I actually don't think so at all. I don't think they're related. I think that people who have work ethic then can learn fitness, but most people who are really into fitness,

this is what I think is kind of interesting. I think people who are really into fitness actually are really into fitness and never really developed the work ethic. They actually just do it because they like it. And so then they expect and they preach that. They're like, I have discipline. I'm waking up at five. I'm like, you love taking pictures with your shirt off. You love going this is not, this is not you showing it because here's the thing. That same person won't fucking do 100 messages every day. Right. Right. Right. They won't, they won't call. They won't, they won't message. They won't run ads. They won't do the stuff that they're supposed to do because it's hard. And so they think that because it's hard for other people to do fitness,

that because they do fitness, they are hardcore or discipline. when in reality they just have a preference or a proclivity to doing something that other people just tend not to do. But if you find me an entrepreneur who's a winner and who has the work ethic and then you say, hey, going to fitness, that person will be successful. They might not become a body better because they're not super passionate about it, but they'll get fit. Real quick, guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys that you help me spread the words so we can out more entrepreneurs, make more money, feed their families, make better products and have better.

experiences for their employees and customers. And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you do is you can just leave a review. If it takes 10 seconds or one type of the thumb, it would mean the absolute world to me. And more importantly, it may change the world with someone else. What do you think has been the scariest moment along your journey so far? I have a guess what it might be for reading your book. The worst and most painful period was when I started the first gym.

That was by far emotionally the hardest. think it was because I was the most alone. Like I traveled to a new area. I didn't know anyone. Like when people left, it was just me. I had no friends. I had no family. I had no, I'd know nothing. And so I was sit there in an empty gym being like, what the fuck am I going to do? And so, and it was terrifying. But I was so insecure and of having a fearing failure and feeling the judgment of what I thought other people would say about me, that that was like the only thing that really compelled me. And so it was kind of that pain that I was running away from. The second, probably hardest time was the one that I talked about in the book where we um where I basically lost

everything that was that was pretty shouldn't tell what I read from the book and we'll have a later question on it but I feel like you know my parents had similar feelings about business and so forth as yours did and I didn't feel a lot of support do you think there's a you see a trend among successful people who almost like they're running from not being a loser or not being disapproved of in a sense because I know how you said that, that was 100% my motivation. Yeah. You know, like you look at Michael Jordan, you know, and for him it was the comparison to his brother. I'll rewind real quick. I think humans experience pain. And then it just takes

certain types of people take the pain and let it beat the strength into them and other people take the pain and let it beat the strength out of them. And they blame the person who caused that pain as the reason they are not successful rather than saying, I will not give this person power anymore over my life. And so as a result of the pain that they beat into me, me, I will become stronger and I will prove them wrong or whatever it is. And I think that most people though, the level of success, I think in some way in the beginning is proportional to the pain that you experienced. But then I do think that there is a switching point because once you have satisfied, and I think that you're rubbing into this like right now and some of the conversations we've had,

it's like there comes a point where you're like, it's not really reasonable for anyone to say that I'm not successful anymore. There's no more marginal utility for money. Like another million dollars or another 10 million dollars truly changes nothing about my life. And so then I think that the motivation has to change. And I don't think it happens overnight, but I think that it does switch from a fear-based drive to a pool-based drive. And as a fun quote that I like a lot, is that most people don't know the difference between fear and motivation. Most people just, they conflate the two. They just, they assume the feeling they have right now, maybe some people are listening to this, that drive, they might think it's motivation but it's actually fear and then when fear is gone because you've

satisfied all of your needs then they don't know what motivation actually feels because it feels different that's a good point you know i see even on like a youtube channel that thing took off like a rocket shit bro you know i i think the thing that resonates with people is just your thoughts or like it's almost like where did you get this perspective do you feel that a lot of your thoughts now come from just, I mean, obviously, building a business to your size, you have to gain perspective, but is it more the people you've been around? Is it the books you've read? Or is it just literally just the experience of doing it? I think I spend a lot of time not doing much. So counter to the grind culture, most of my day is empty. I don't have anything after this. I didn't have anything

until noon today. Three days a week, I have nothing on my calendar. So, you know, and so a lot of time, you know, I occupy my time just reading stuff that, you know, that seems interesting. And they're usually totally disparate books. And it could be anything from like religious stuff to pricing to whatever. And I also think that my closest friend, Dr. Cashy, is basically a philosopher. And he and I spent a long time talking about ideas. And I think a lot of that comes into the context of death, honestly. So we talk about death a lot because I think a lot of people don't like talking about death. But in doing that, I think we get a lot of perspective on like what is important and why. And so that's been helpful for me. When putting together offers, getting back to your, you know, a chapter in your book,

Do you think people have a natural tendency to make them complicated or not to listen? Like when I read it, it just seems so clear, but do you still have people who fight you on it or try to overcomplicate it? Like really almost no one's falling on the book. Like every person is like, I mean, we've gotten a lot of good feedback from the book. And so not really. I haven't had a lot of, I haven't had any negative feedback from the book. So I'm like waiting for that.

But no, I think it's a fairly clear structure. And most people just see it. at least two or three elements that they could include in their offer to make it more valuable. And most times when people, like as a thought experiment for everybody who's listening to this, the offer in my opinion, besides the marketplace you are selling to, is the most powerful lever you have on how much money you're going to make, right? At least on the ability to sell stuff, which obviously is a skill in of itself. But if you have a really good offer, it's much easier to sell, right?

It makes your job easier. And so if I were to say, for example, anyone here, hey, I will double your business in the next 30 days, guaranteed or I'll pay you twice what you paid me, right? That's it. That is an offer structure. There's an outcome. There's a timeline. There's a guarantee.

Right. And I'm only taking two people. Right? There's some scarcity for you. And so just like that, that would probably be right now a compelling offer to most people here. Right? And depending on the price,

they just have to factor into what doubling the profit or doubling their business would value to them. You know, if you're making 10 grand a month and I charge a million dollars for that, then it might not make sense. but if you're making a million a month, then it's a very easy decision for the prospect. It doesn't take a lot of salesmanship.

It's just a simple decision, right? Best case, worst case, here it is. Right. And so if that's the extreme example, then if we take that extreme and just say, how many steps backwards do we need to take until we arrive at something that's reasonable? Scalable.

Yeah, I would say reasonable first and then scalable second because maybe a certain percentage of people listening to this. It's so funny. There was a guy who went to high school with. he got furloughed because he was a chiropractor. So he graduated from chiropractors, a doctorate chiropractor. And then got furloughed like the next month after COVID and was like, bro, I need to make money. And I was like, do you want to make money being a chiropractor or do you want to make money?

And he was like, okay, so we just put him in gym watch and I said just sell weight loss and where he got. And so he's selling and literally 90 days later he's doing 20 grand a month and he's stoked, right? But the reason that I brought this up was that before he started making the money, He was like, hey, here's my offer. I'm trying to put these pieces together. You know, I'm afraid that, you know, if I give away too much, it's not scalable. And I was like, bro, you don't have any clients.

I was like, what scale issues are you worried about right now? You have no clients. So it's like worry about scale later once you have cash flow. And to prove the point of how much I believe in this, I spent two years launching gyms. So people were like, Alex, how'd you build such a big coaching business in gyms? It's like, because I launched gyms for two years. I flew out, I showed up at the front desk, and I sold membership for 24 days. And then I flew out and did it again.

And then I flew out and then I did it again, right? And then I had other guys that were flying out with me. So I was running a sales team and doing that. They're like, are you so good at it? It looks like did as many fucking times. Right. And so I think so many people aren't that good at the thing that they think they're good at, which is why they don't make me fucking money.

Right. And so anyways, ran over. But in terms of scalability, I think it is far better to get good at the thing and think, how can I provide so much value that this person wouldn't say no? get the yeses, get the cash flow, and then determine what people find valuable, what they don't find valuable, and then peel back the offer until you still have the ultra-val stuff, but you can pull back some of the things to make a little more skill. That's a good perspective. In fact, I mean, I didn't do the gyms, but I did do the online. Yeah. And that's kind of what made it. And in fact, it got to that point where I had to start to sign, am I going to do low-ticket fitness, or am I going to go or a hike ticket?

and, you know, I had like trainers lined up out the door that were like, hey, can you do this for me? And that's actually how I got into this. I never thought I get into this. Back to your point in what you just said, something I found interesting that you keep bringing up is when you talk about scaling, getting to the next level, is not doing too much, right? So not having too many offers, not getting too convoluted. So is there a litmus test to know when you're adding in too much to your offer? So let's say you have a coaching offer and then you throw in the 80s. agency and then you do this done for you that and then emails and all of a sudden you have all these

offers is there a litmus test of that to know when it's a good idea and when it's not a good idea it's a good question i wish i gave a perfect answer but i don't know if i have one yeah i don't want to give a false answer i don't know okay i mean i feel like i know when i see it you know what i mean but in terms of like what framework would i use to say this is too much or too little the easiest litmus test that it's like from if we're going big picture the easiest limit test that i would think of is, are we changing avatars? That would be the first, the first, let me see. The second would be, are we changing place in the market?

And so there's four major strategic positions in any marketplace. You've got ultra low, which is like what you can, like VAs for $400 is ultra low price. Then you've got your low price, which is Walmart, right? And then you've got premium, which is more expensive than the average stuff. And then you've got luxury, right, which where demand increases as a result of status and price, where the higher the price is, the more than status. associated with it. Now, people who might be listening to this might think they're in luxury. They probably are. They're probably in premium, which like your program, my program, they are

premium products. They're not luxury products. No one has statuses associated with how much they page it. Right. And so if I were changing where I sit on that graph, then that would be another thing where I would say, okay, we still want to occupy one position, number one. Number two, we want to serve one avatar. And I think that to, I think part of the reason that the question is so difficult to answer is that there has to be context behind it. So like right now we have six businesses that were that were in like heavily in. Right. And so you're like, people might hear that and be like, well, Alex, I thought you told me to focus on the thing. And the answer is yes. But it's also at what point do I have the skill set and character traits that would allow me to do these other things. And so I think like

when I started my second business, which is prestige labs, I did that out of sequence. I should not have done it as soon as I did it. Now that I have it now, it took me a long time of a failure and suffering during that period of time of transition of being CEO of two companies, that I can now see that in retrospect. I don't know how things would have turned out differently, et cetera, but I think that there's a skill set thing. Could you have multiple offerings if you have champions for each of those product lines? Yes, I think so. Because if you can run multiple companies, you can run multiple product lines, but most people don't have the skill set to do it. So as a broad statement, for most entrepreneurs who are under $10 million a year, I say focused on selling one product

and one channel. And then the second going from, you know, three to $10 million is just increasing the back-end, lifetime gross profit per customer. I hope you guys enjoyed that as much as I enjoyed making it for you. And in part two, we talked about how to acquire customers profitably and the formula that I used to approach this problem in every business that we have scaled to date. I think you guys will enjoy it.